The supreme court on Monday (Sept 28) refused to stay the Centre’s decision to impose Merchant Discount Rate (MDR) on specified Unified Payments Interface (UPI) person-to-merchant transactions above Rs 2,000, to be implemented from October 15. However, an affidavit from the Union government was sought by the court asking to explain the basis and legal framework for the new charges.&nbsp;A bench comprising Chief Justice Surya Kant and Justices Joymalya Bagchi and V Mohana while hearing a PIL filed by advocate Anjan Datta challenging the Centre’s notifications to impose Merchant Discount Rate observed that the issue is less legal and more technical.&nbsp;The bench also questioned the legal basis for imposing the charge and sought to know whether the levy was a tax or a fee and what was the executive basis for imposing it.&nbsp;The National Payments Corporation of India (NPCI) had on September 16 announced that a fee of &nbsp;0.4 per cent will be charged on Unified Payments Interface (UPI) transactions to certain merchants when the transaction value exceeds ₹2,000. It also clarified that customers will not have to pay any fee for making UPI payments under the revised system. As per the new rules, Person-to-Merchant (P2M) UPI payments above ₹2,000 will attract a 0.4 per cent Merchant Discount Rate (MDR). However, the charge will not exceed ₹300 for a single transaction. The new MDR structure will be effective from October 15, 2026.&nbsp;<h2>What is MDR?</h2>&nbsp;MDR refers to the fee charged to merchants by banks and payment service providers for processing digital payments. The amount depends on factors such as the payment method, the type of merchant, the transaction value, and the agreement between the businesses involved. In a digital payment system, a customer pays a merchant electronically, while the merchant pays a small fee to the company or bank that processes the transaction. Although merchants are generally expected to bear this cost, some businesses may add the charge to the customer's bill.&nbsp;

The National Payments Corporation of India (NPCI) had on September 16 announced that a fee of  0.4 per cent will be charged on Unified Payments Interface (UPI) transactions to certain merchants when the transaction value exceeds ₹2,000.

The supreme court on Monday (Sept 28) refused to stay the Centre’s decision to impose Merchant Discount Rate (MDR) on specified Unified Payments Interface (UPI) person-to-merchant transactions above Rs 2,000, to be implemented from October 15. However, an affidavit from the Union government was sought by the court asking to explain the basis and legal framework for the new charges. A bench comprising Chief Justice Surya Kant and Justices Joymalya Bagchi and V Mohana while hearing a PIL filed by advocate Anjan Datta challenging the Centre’s notifications to impose Merchant Discount Rate observed that the issue is less legal and more technical. The bench also questioned the legal basis for imposing the charge and sought to know whether the levy was a tax or a fee and what was the executive basis for imposing it. The National Payments Corporation of India (NPCI) had on September 16 announced that a fee of 0.4 per cent will be charged on Unified Payments Interface (UPI) transactions to certain merchants when the transaction value exceeds ₹2,000. It also clarified that customers will not have to pay any fee for making UPI payments under the revised system. As per the new rules, Person-to-Merchant (P2M) UPI payments above ₹2,000 will attract a 0.4 per cent Merchant Discount Rate (MDR). However, the charge will not exceed ₹300 for a single transaction. The new MDR structure will be effective from October 15, 2026. What is MDR? MDR refers to the fee charged to merchants by banks and payment service providers for processing digital payments. The amount depends on factors such as the payment method, the type of merchant, the transaction value, and the agreement between the businesses involved. In a digital payment system, a customer pays a merchant electronically, while the merchant pays a small fee to the company or bank that processes the transaction. Although merchants are generally expected to bear this cost, some businesses may add the charge to the customer's bill.

The National Payments Corporation of India (NPCI) had on September 16 announced that a fee of &nbsp;0.4 per cent will be charged on Unified Payments Interface (UPI) transactions to certain merchants when the transaction value exceeds ₹2,000.

SC refuses to stay fee on UPI transactions, seeks explanation from Centre

The government on Tuesday (September 15) announced that Unified Payments Interface (UPI) payments above ₹2,000 will attract a Merchant Discount Rate (MDR) of 0.4 per cent under a revised framework introduced by the National Payments Corporation of India (NPCI). However, consumers will continue to use UPI without paying any charges.&nbsp;The revised framework will come into effect from October 15, 2026, and will apply to selected merchant transactions.&nbsp;Industry data suggests that around 96 per cent of all UPI transactions by volume are below ₹2,000, keeping the vast majority of payments outside the new MDR framework.<h3>What changes for UPI payments above ₹2,000?</h3>Under the new framework, a 0.4 per cent MDR will apply to Person-to-Merchant (P2M) UPI transactions above ₹2,000. The charge will be capped at Rs 300 for transactions of Rs 75,000 and above.&nbsp;For example, a 0.4 per cent MDR on a ₹2,000 transaction would amount to ₹8. However, this is a merchant-side charge and does not mean consumers will have to pay a fee when making UPI payments.&nbsp;Person-to-Person (P2P) transactions will remain outside the MDR framework. P2M transactions of up to ₹2,000 will also continue to remain free of MDR.&nbsp;Small merchants covered under the Person-to-Person Merchant (P2PM) framework will also continue to get zero MDR. This category includes small vendors receiving up to ₹1 lakh per month through UPI QR payments directly into their bank accounts.&nbsp;Also Read: <a href="https://www.wionews.com/india-news/surrendering-to-american-pressure-rahul-gandhi-targets-pm-modi-govt-over-upi-charges-1789476200880">‘Surrendering to American pressure’: Rahul Gandhi targets PM Modi govt over UPI charges</a><h3>Special charges for some services</h3>NPCI has also set a flat MDR of ₹5 per transaction for certain merchant categories. These include railways, telecom services, insurance and fuel.&nbsp;The ₹5 charge will apply to UPI payments above ₹2,000 in these specified categories.&nbsp;The revised framework also proposes a dedicated fund to support digital payment infrastructure for existing small merchants and businesses in Tier 3 and smaller markets.&nbsp;NPCI said there would be no impact on small-value UPI transactions of up to ₹2,000 for merchants. Such transactions account for more than 95 per cent of all UPI P2M transactions.<h3>Why has NPCI revised the MDR framework?</h3>The new framework is aimed at expanding UPI acceptance and encouraging its continued use among merchants. It also seeks to bring more small businesses into India's digital payments ecosystem.&nbsp;According to NPCI, the MDR collected on high-value transactions will be distributed among different players in the UPI ecosystem. The funds will help support the expansion of UPI to new users and merchants, along with investments in resilience, cybersecurity and innovation.&nbsp;NPCI also said the revised UPI MDR remains lower than the charges linked to several other digital payment methods, including credit cards, debit cards and wallets.

UPI merchant transactions above ₹2,000 will attract a 0.4 per cent MDR from October 15, while consumers will continue to make UPI payments without paying any direct charges.

The government on Tuesday (September 15) announced that Unified Payments Interface (UPI) payments above ₹2,000 will attract a Merchant Discount Rate (MDR) of 0.4 per cent under a revised framework introduced by the National Payments Corporation of India (NPCI). However, consumers will continue to use UPI without paying any charges. The revised framework will come into effect from October 15, 2026, and will apply to selected merchant transactions. Industry data suggests that around 96 per cent of all UPI transactions by volume are below ₹2,000, keeping the vast majority of payments outside the new MDR framework. What changes for UPI payments above ₹2,000? Under the new framework, a 0.4 per cent MDR will apply to Person-to-Merchant (P2M) UPI transactions above ₹2,000. The charge will be capped at Rs 300 for transactions of Rs 75,000 and above. For example, a 0.4 per cent MDR on a ₹2,000 transaction would amount to ₹8. However, this is a merchant-side charge and does not mean consumers will have to pay a fee when making UPI payments. Person-to-Person (P2P) transactions will remain outside the MDR framework. P2M transactions of up to ₹2,000 will also continue to remain free of MDR. Small merchants covered under the Person-to-Person Merchant (P2PM) framework will also continue to get zero MDR. This category includes small vendors receiving up to ₹1 lakh per month through UPI QR payments directly into their bank accounts. Also Read: ‘Surrendering to American pressure’: Rahul Gandhi targets PM Modi govt over UPI charges Special charges for some services NPCI has also set a flat MDR of ₹5 per transaction for certain merchant categories. These include railways, telecom services, insurance and fuel. The ₹5 charge will apply to UPI payments above ₹2,000 in these specified categories. The revised framework also proposes a dedicated fund to support digital payment infrastructure for existing small merchants and businesses in Tier 3 and smaller markets. NPCI said there would be no impact on small-value UPI transactions of up to ₹2,000 for merchants. Such transactions account for more than 95 per cent of all UPI P2M transactions. Why has NPCI revised the MDR framework? The new framework is aimed at expanding UPI acceptance and encouraging its continued use among merchants. It also seeks to bring more small businesses into India's digital payments ecosystem. According to NPCI, the MDR collected on high-value transactions will be distributed among different players in the UPI ecosystem. The funds will help support the expansion of UPI to new users and merchants, along with investments in resilience, cybersecurity and innovation. NPCI also said the revised UPI MDR remains lower than the charges linked to several other digital payment methods, including credit cards, debit cards and wallets.

UPI merchant transactions above ₹2,000 will attract a 0.4 per cent MDR from October 15, while consumers will continue to make UPI payments without paying any direct charges.

UPI rule change: 0.4% MDR on merchant payments above ₹2,000; consumers unaffected

Lok Sabha Leader of Opposition Rahul Gandhi on Tuesday (Sept 15) accused the BJP-led central government of giving in to pressure from American payment companies over the reported move to allow charges on some UPI transactions.&nbsp;Gandhi said the government’s claim that customers would not be charged directly does not address the impact on consumers. He argued that allowing a Merchant Discount Rate (MDR) on merchant transactions above ₹2,000 could eventually push up prices for buyers.<h2>Rahul Gandhi targets Centre over UPI policy</h2>In a post on X, Gandhi alleged that the government had opened the way for fees to be imposed on UPI payments above the ₹2,000 threshold.

<blockquote class="twitter-tweet">मोदी सरकार ने चुपचाप UPI पर फ़ीस लगाने का रास्ता खोल दिया है। अब ₹2,000 से ऊपर के merchant UPI लेन-देन पर MDR लगाया जा सकता है। इन ट्रांजैक्शंस की संख्या भले ही सिर्फ़ 5% हो, लेकिन UPI के कुल transaction value का करीब 65% इन्हीं में है। सरकार कहती है कि ग्राहक से कोई फ़ीस नहीं…&mdash; Rahul Gandhi (@RahulGandhi) <a href="https://x.com/RahulGandhi/status/2099757892731883671?ref_src=twsrc%5Etfw">September 15, 2026</a></blockquote> <script async src="https://platform.x.com/widgets.js" charset="utf-8"></script>

"The Modi government has quietly opened the door to imposing fees on UPI. Now, MDR can be levied on merchant UPI transactions above Rs 2,000. Even if these transactions account for just 5% of the volume, they make up nearly 65% of UPI's total transaction value. The government says no fees will be charged to customers. But where will the fees imposed on shopkeepers ultimately come from? Added to prices, straight out of the customer's pocket," he said.&nbsp;Gandhi also claimed that American payment companies have previously opposed India’s zero MDR policy. He alleged that the government was now moving towards changing the policy in the same direction.&nbsp;"Just like with the US Trade Deal, Compromised PM Modi is once again surrendering to American pressure," he said.&nbsp;Also Read: <a href="https://www.wionews.com/world/india-dismisses-pakistan-bounty-on-masood-azhar-as-phony-1789473976877">India dismisses Pakistan bounty on Masood Azhar as 'phony'</a><h2>Finance Ministry notification</h2>Gandhi's remarks came after the Finance Ministry issued a notification stating that UPI transactions up to ₹2,000 cannot attract any direct or indirect charge from banks or system providers.&nbsp;The provision effectively keeps around 96 per cent of UPI transactions by volume within the zero-charge threshold, according to the notification.&nbsp;Congress president Mallikarjun Kharge also criticised the reported move earlier on Tuesday. He accused the government of looking for new ways to increase the financial burden on people instead of providing relief amid inflation.&nbsp;"The Modi government's loot has now reached UPI. 'No fees on UPI' has been changed to 'no fees on UPI transactions up to Rs 2,000'. Sky-high inflation has already emptied the common man's pocket. Wholesale inflation is near 10%, and the BJP government has planned to impose a 'Digital Payments Tax' on the public, aiming to destroy whatever little savings they have left," Kharge said.

Rahul Gandhi has accused the Modi government of giving in to US pressure over UPI charges, arguing that merchant fees on transactions above ₹2,000 could ultimately increase costs for consumers.

Lok Sabha Leader of Opposition Rahul Gandhi on Tuesday (Sept 15) accused the BJP-led central government of giving in to pressure from American payment companies over the reported move to allow charges on some UPI transactions. Gandhi said the government’s claim that customers would not be charged directly does not address the impact on consumers. He argued that allowing a Merchant Discount Rate (MDR) on merchant transactions above ₹2,000 could eventually push up prices for buyers. Rahul Gandhi targets Centre over UPI policy In a post on X, Gandhi alleged that the government had opened the way for fees to be imposed on UPI payments above the ₹2,000 threshold.

Rahul Gandhi has accused the Modi government of giving in to US pressure over UPI charges, arguing that merchant fees on transactions above ₹2,000 could ultimately increase costs for consumers.

‘Surrendering to American pressure’: Rahul Gandhi targets PM Modi govt over UPI charges

India has opened the door to a possible change in the way UPI payments are charged, raising an important question: Will UPI no longer be free?

A recent bill removes a legal barrier that currently prevents banks and payment service providers from imposing a Merchant Discount Rate (MDR) on UPI and certain other digital payments.

MDR is essentially a fee paid by merchants to banks or payment processors for processing digital transactions. UPI has traditionally operated under a zero-additional-charge model, allowing merchants to accept payments without directly paying this fee.

However, the government has indicated that any MDR introduced would be nominal and limited to certain merchant transactions.

Importantly, person-to-person UPI payments are expected to remain free. Routine transactions such as sending money to friends and family are therefore not expected to attract a new UPI fee.

Most merchant transactions are also expected to remain free, while large merchants and high-value commercial transactions could potentially face MDR if the new structure is introduced.

UPI Charges May Change | New MDR Rules Explained | Will Consumers and Merchants Have to Pay More?

India's free UPI payment ecosystem could soon witness its biggest policy shift since launch. The government has proposed amendments to the Payment and Settlement Systems Act that create a legal framework for introducing Merchant Discount Rate (MDR) on selected digital payment modes in the future.

While no immediate charges have been announced, reports suggest the government is considering a 0.25% to 0.4% merchant fee on UPI transactions above ₹2,000 made to businesses. Person-to-person transfers are expected to remain free, while larger merchants could bear the charges based on their annual turnover.

UPI Payments May No Longer Be Free? Government Eyes Merchant Charges

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SC refuses to stay fee on UPI transactions, seeks explanation from Centre

UPI charges: 0.4% MDR on merchant payments above ₹2,000; consumers unaffected

Surrendering to US pressure: Rahul Gandhi targets PM Modi govt over UPI charges

UPI Charges May Change | New MDR Rules Explained | Will Consumers and Merchants Have to Pay More?

UPI Payments May No Longer Be Free? Government Eyes Merchant Charges